The role of women in our nation’s economy has changed dramatically over the past 100 years. In the 20th century women entered the paid workforce in greater numbers and, therefore, earned and controlled more money than women in earlier generations. And because of estate tax laws that allow assets to be left to spouses free of tax, women, as the surviving partner in most marriages, are now accumulating assets in later years in amounts never seen before.
Women and estate management
According to research by OppenheimerFunds, women are generally less knowledgeable about investing than men.1 Ironically, however, because women’s life expectancies are approximately six years longer than men’s, the same research shows that nine out of ten women will eventually be totally responsible for the management of their assets.
For many women, this financial management will include deciding which charitable organizations and institutions to support. What do female donors and prospective donors need to know to make the most effective gifts possible? And what do gift planners need to know about women as they assist them in planning gifts?
Statistics reveal women’s challenges
As a demographic group, women of necessity have different concerns than men when it comes to making financial decisions. First, as mentioned above, women must consider the ramifications of living longer than men and therefore, the need to save more money. The United States Census Bureau estimates that 40% of women who reach the age of 50 this year will live to be 100 years old.2 With retirement extending over a period of 35 years or longer, women will need to be increasingly skillful in managing their assets during what could be a very long period with little or no earned income.
Despite this fact, women are not saving as much as their male counterparts. Women’s retirement plan income lags behind men’s for several reasons. First, many women leave the job force for a number of years to care for children and therefore do not participate for as many years in company- sponsored retirement plans. Second, many work in part time positions or service industries that offer no retirement benefits. Third, most women simply earn less during their working years and therefore accumulate fewer retirement benefits.3 Recent reports reveal that women still earn just under 75 cents for every dollar a man earns in a comparable job.4
Longer life expectancies, as well as increasing divorce rates and a decline in marriages, also means that more women than ever before will be living alone in later years. According to the Census Bureau, 15.3 million women lived alone in 1998. That number has doubled since 1970. And while most age groups both male and female saw an increase in the likelihood of living alone, those most likely to be living alone are women age 75 or older at 52.9%.
Given the facts outlined above, it becomes clear that the financial challenges facing women are complex and sometimes daunting.
The good news
While they have not yet achieved income equality and have special financial hurdles to overcome, women continue to give to charitable causes in increasing numbers. According to a recent report, women may even be contributing a larger percentage of their income to charity than men (when men’s contributions are adjusted so that each dollar is calculated as 75 cents, the amount women earn for every dollar a man earns).5
Women age 55 and older are also entering the labor force at greater rates than in past years. For example, the greatest labor force participation increase was among women in the 55 to 61 age group, which jumped from 44% in 1963 to 58% in 1999. 6 As a result of this labor force increase, more women are earning and saving in their later years when they may need the income the most due to widowhood and/or retirement.
To enhance their personal financial and charitable goals, women are also learning more about the money they are earning, inheriting, and managing. In the past, the specific financial needs of women often were not addressed. But that has changed dramatically over the past decade. Today there are a wide variety of clubs, seminars, television specials, and books all geared toward women’s finances.
According to the OppenheimerFunds research, education on financial matters is just what women today want. The study shows that 85% of older women wish they had learned more about their money and investing in their younger years, with 64% expressing interest in learning more about investing in today’s environment. This trend of women learning more about and taking charge of their investments and assets is likely to continue in coming years.
And as women become more knowledgeable about financial affairs, the nonprofit community must increasingly be prepared to educate their female donors about the variety of gift plans that can help them achieve their personal and philanthropic goals.
What to do?
While every donor is an individual with specific needs, gift planners need to be ready to assist female donors and keep in mind the issues facing a large number of women.
For example, many women, as well as many male donors, may have concerns about making large outright gifts because they are not sure how much money they will need to support themselves throughout their retirement. Gifts by bequest may be a welcome option to those donors who would like to retain control over their assets until their death. In fact, most charities that track bequest statistics find that 70% or more of their bequests come from the estates of women, in many cases the widows of men who were generous supporters during their lifetime but who left little or nothing at their death, presumably due to the unlimited marital deduction and the wish to provide for their spouse’s future.
Other women may want to make a significant gift, but also need a regular income they can depend upon. Gift planners may want to discuss plans such as gift annuities and other life income plans that offer payments to the donor for the rest of her life. This may be especially appealing to donors who have highly appreciated property such as stock that generates little income from dividends. Women tend to be more risk averse than men in their choice of investments and the gift annuity (or annuity trusts) offers the possibility of higher income with little or no risk from investment fluctuations.
For younger, more sophisticated, women, the charitable remainder unitrust and pooled income funds offer an opportunity for more aggressive investment and income that can grow over a longer anticipated period of retirement.
How to communicate
There is a great deal of controversy surrounding whether to single out women for special information on estate planning. In the case of older women, it is important to educate them about the need for their own plans apart from the husband. Basic motivational information designed to prompt them to seek professional guidance can be a valuable service to the older women among your constituency.
In the case of younger women, perhaps age 65 and younger, take great care when approaching women as a separate group. Younger women, while appreciative of efforts to equalize income and promote advancement opportunities, may actually be offended when the suggestion is made that their financial planning needs are different from those of their male counterparts.
Rather than overtly separating out women donors for different marketing approaches, wise development officers may choose to speak to women in different situations by means of real or hypothetical examples offered in gift planning newsletters and other publications. The use of well-placed testimonials from female donors is another way to let women speak to other women with relevant stories and information about charitable giving.
The future of philanthropy in America depends on a well-considered response to the realities of aging and wealth accumulation in our nation. Part of that reality is the increasingly important role of women in accumulating, managing, and distributing wealth.
1 OppenheimerFunds. “Women & Investing.” June 15, 1999. http://www.oppenheimerfunds.com/pdf/women_investing.pdf (16 August 2000).
2 Neuharth, Al, “What’s to Celebrate When Wife Turns 50?” USA Today, 4 August 2000.
3 Women’s Institute for a Secure Retirement (WISER). “Women & Pensions: An Overview.” http://www.wiser.heinz.org/pensions_overview.html. (16 August 2000).
4 Spraggins, Rennee E. U.S. Census Bureau Brief, “Women in the United States: A Profile.” March 2000. http://www.census.gov/prod/2000pubs/cenbr001.pdf (16 August 2000).
5 Meister, Doris. “Women’s Charitable Giving on the Rise.” Personal Advisor, a publication of Merrill Lynch. October 1999. http://www.plan.ml.com/zine/personal/perstory206.html (16 August 2000).
6 Federal Interagency Forum on Aging-Related Statistics. “Older Americans 2000: Key Indicators of Well Being.” August 2000. http://www.aoa.dhhs.gov/agingstats/chartbook2000/economics.html (16 August 2000).